G.R. No.

96494 May 28, 1992

CASA FILIPINA DEVELOPMENT CORPORATION, petitioner,

vs.
THE DEPUTY EXECUTIVE SECRETARY, OFFICE OF THE PRESIDENT, MALACAÑANG,
MANILA, AND JOSE VALENZUELA, JR., respondents.

FACTS:

The private respondent, Jose Valenzuela, Jr., filed a complaint against Casa Filipina Development
Corporation before Office of Appeals, Adjudication and Legal Affairs (OAALA) [now Housing and
Land Use Regulatory Board (HLURB)] for its failure to execute and deliver the deed of sale and the
transfer certificate of title (TCT). Private respondent alleged that he entered a contract to sell with
petitioner for the purchase of a lot for a total of 51,984.00 to be paid in 12 equal monthly installments
with 24% interest. He also alleged that despite full payment, the petitioner refuses to execute the
deed of sale and deliver the TCT. He had also offered to pay for or reimburse petitioner the
expenses for the transfer of the title but the petitioner refuses to accept the same.

The OAALA rendered judgment in favor of private respondent and ordered petitioner to execute the
deed of sale and deliver the TCT. It also ordered that in the event petitioner is unable to deliver the
title to the said lot, petitioner is to refund to private respondent his total payments plus 24% interest
per annum from the date of the filing of the complaint, until fully paid.

Petitioner then filed an appeal before the HLURB which the HLURB dismissed for lack of merit.
Petitioner appealed further to the Office of the President which was also dismissed for lack of merit.
Hence, this petition.

ISSUE:

Whether or not the legal interest or the interest rate stipulated in the contract is to be applied.

RULING:

The Supreme Court ruled that the interest rate stipulated in the contract is to be applied.

The Supreme Court emphasized that in cases where damages in the form of interest is due but no
specific rate has been previously set by the parties, the legal interest of 12% per annum must be
applied. In the present case, however, the interest rate of 24% per annum was mutually agreed upon
by petitioner and private respondent in their contract to sell. There is no reason why this same
interest rate should not be equally applied to petitioner which is guilty of violating the reciprocal
obligation.
G.R. No. 115821 October 13, 1999

JESUS T. DAVID, petitioner,

vs.
THE COURT OF APPEALS, HON. EDGARDO P. CRUZ, MELCHOR P. PEÑA, and VALENTIN
AFABLE, JR., respondents.

FACTS:

Judge Diaz of the RTC of Manila issued a writ of attachment over the real properties of private
respondents. Judge Diaz ordered private respondent to pay petitioner 66,500.00 with interest from
July 24, 1974, until fully paid. However, Judge Diaz amended said Decision, so that the legal rate of
interest should be computed from January 4, 1966, instead of from July 24, 1974. Private
respondent appealed to CA and SC, which both affirmed the decision of the lower court.
Subsequently, entries of judgment were made and the record of the case was remanded to RTC
Branch 27, presided by respondent Judge Cruz, for the final execution of the decision as amended.

Upon petitioner's motion, Judge Cruz issued an alias writ of execution by virtue of which respondent
Sheriff Peña conducted a public auction. Sheriff Peña informed the petitioner that the total amount of
the judgment is 270,940.52. The amount included a computation of simple interest.

Petitioner, however, claimed that the judgment award should be P 3,027,238.50, because the
amount due ought to be based on compounded interest. Although the auctioned properties were
sold to the petitioner, Sheriff Peña did not issue the Certificate of Sale because there was an excess
in the bid price in the amount of 2,941,524.47, which the petitioner failed to pay despite notice.

Petitioner filed a motion praying that respondent Judge Cruz issue an order directing respondent
Sheriff Peña to prepare and execute a certificate of sale in favor of the petitioner, placing therein the
amount of the judgment as 3,027,238.50, the amount he bid during the auction which he won. Judge
Cruz denied the motion. A Motion for Reconsideration was also denied by Judge Cruz.

The petitioner filed a petition for certiorari, prohibition and mandamus before the CA which was laso
denied.

Hence, petitioner filed a petition to the SC insisting that in computing the interest due of the
66,500.00, interest should be computed at 6% on the principal sum of P66,500.00 pursuant to Article
2209 and then "interest on the legal interest" should also be computed in accordance with the
language of Article 2212 of the Civil Code. In his view, said article meant "compound interest".

ISSUE:

Whether or not compound interest should be applied.

RULING:
No. Compound interest should not be applied.
The SC held that Article 2212 contemplates the presence of stipulated or conventional interest which
has accrued when demand was judicially made. In cases where no interest had been stipulated by
the parties, no accrued conventional interest could further earn interest upon judicial demand.

In the present case, the CA made the finding that no interest was stipulated by the parties. In the
promissory note denominated as "Compromise Agreement" signed by the private respondent which
was duly accepted by petitioner no interest was mentioned. In his complaint, petitioner merely
prayed that defendant be ordered to pay plaintiff the sum of P66,500.00 with interest thereon at the
legal rate from the date of the filing of the complaint until fully paid.